Philip Morris loses plain packs battle, but the war continues

By Professor Mark Davison

Just prior to Christmas, 2015, the Australian government received the gift of a decision that Philip Morris Asia’s Ltd’s action pursuant to the Bilateral Investment Treaty between Australia and Hong Kong against Australia’s measures for plain packaging of tobacco was not within the jurisdiction of the tribunal.

The facts leading to that conclusion have been explained elsewhere but, briefly, the Philip Morris group of companies re-arranged its corporate structure so that its Hong Kong company, Philip Morris Asia Ltd, acquired an interest in the Australian tobacco market after the Australian government announced its intention to introduce plain packaging. Shortly after that re-arrangement, Philip Morris Asia Ltd instituted proceedings pursuant to the Investor State Dispute Settlement clauses in the BIT. While the full decision of the tribunal will not be released until confidential information has been redacted, the tribunal has announced that the attempt by Philip Morris Asia Ltd to claim that it is within the jurisdiction of the BIT has failed.

The remaining action against Australia’s plain packaging measure is underway at the World Trade Organisation (WTO) and a decision of the Panel is not expected before the first half of 2016. While numerous provisions of TRIPS and the TBT agreements have been alleged, one of the key aspects of the dispute is the interpretation of Article 20 of TRIPS which provides, in part, that

“The use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements …”

The Panel’s decision will necessarily involve a decision about the extent to which public health considerations may override the obvious desire of trademark owners to use their trademarks extensively. Very different views are held about the meaning of the words used in Article 20 and the context to be considered in the process of determining their meaning. See eg an article by Mark Davison and Patrick Emerton “Rights, Privileges, Legitimate Interests, and Justifiabilty: Article 20 of TRIPS and Plain Packaging of Tobacco” ((2014) 29 Am U Int’l L. Rev 505) that supports an interpretation that gives considerable deference to governments in the exercise of their right to protect the health of their citizens. Alternatively, see an article by Susy Frankel and Daniel J. Gervais “Plain Packaging and the Interpretation of the TRIPS agreement” ((2013) 46 VJTL 1149)  that argues that the interests of trademark owners receive considerable protection from Article 20 and the onus is on the Australian government to prove that the measure is justifiable. Since the dispute is the first one regarding TRIPS that squarely requires consideration of the DOHA Declaration and the adoption of guidelines by the 180 members of the Framework Convention on Tobacco Control recommending plain packaging of tobacco, the decision will be keenly awaited.

Mark Davison is a Professor in the Monash Faculty of Law. He has given formal and informal advice to governments and non-government organisations regarding tobacco packaging measures and was a member of the Australian government’s Expert Advisory Group on Plain Packaging of Tobacco Products.

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